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EXPO 2010: Tesco could lose shoppers by moving into mortgages, says Cornell

Jonathan Cornell, head of communications at First Action Finance, says Tesco could end up loosing customers if it turns them down for a mortgage.

Tesco is on track to launch mortgages in the first half of 2011 and is in the process of applying for its Financial Services Authority permissions.

But speaking at the Mortgage Business Expo, Cornell says: “It will be interesting to see how Tesco deals with those it has to decline for a mortgage.”

He says if somebody has been loyal and shopped at Tesco for a number of years it might make them think twice about shopping there if they are turned down for a mortgage.

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  • Joe Adamson 11th November 2010 at 10:53 am

    Anonymous, Not sure how that will be any more of an issue than they have currently for the Car Insurance/Travel Insurance/Credit Cards/Loans or any of the other financial products Tesco sell through their joint ventures. Heck they have already done mortgages previously through a pilot/tie up with a broker. All that will happen is there will be leaflets at the checkouts, and they will market heavily to their sophisticated Clubcard database. I’m sure it will be straightforward enough for them to use the massive amounts of info they hold through Clubcard usage to target sectors of the market based on relative affluence etc (e.g. through their postcode and shopping habits). I can just see it now, sign up for a Tesco Bank mortgage and get 5,000 clubcard points!

  • James Hall 11th November 2010 at 9:45 am

    It is an interesting point, I am not sure it will massively effect peoples shopping habits, people can take it very personally when they get turned down for a mortgage. However, tesco will no doubt come up with a clever marketing spin to get around it.

    You have to think that tesco will probably take a reasonable chunk of the market fairly quickly if they get the approach to customers in store right. One other problem for tesco might be that the potential high decline rate, due to the demographic of customers, may have a negative effect on their cost of acquistion. I am still not completely sure how mortgage sales will sit in a supermarket environment where people always seem pretty stressed and keen to get out to me.

  • A Has Been 11th November 2010 at 9:29 am

    Probably not, they have a credit card that must have had a lot of declines, I would have thought that would have made a bigger impact than mortgages. I am sure they know what they are doing. Wishful thinking Mr Cornell!!